Dougan Co. v. Klamath County

193 P. 645 | Or. | 1920

JOHNS, J.

As we construe the pleadings, the complaint is founded upon the theory that Dougan had a valid and binding contract with the defendant county for the construction of a courthouse on Block 35, at an agreed price; that, having completed his contract, he is entitled to a decree of specific performance against the county and for the recovery of the balance due on the contract price, and that it should be paid out of the special courthouse fund. It is the theory of the defendants that the contract was null and void ab initio; that it was never authorized or legally executed, and that there never was any special fund to construct a courthouse on Block 35; that Dougan knew, or should have known, that it was not a valid contract, and that there was no special fund to construct a courthouse on Block 35; that the $41,548 was wrongfully and unlawfully paid to Dougan, and that the county is entitled to a decree for its repa3?ment; that, after the receipt of notice to the effect that the contract was null and void and canceled, it was the duty of Dougan to cease construction and present any claim which he might have against the county as damages; and that he had a complete and adequate remedy at law.

This suit has been bitterly contested, and the record is voluminous. Although there is no pleading alleging specific acts of fraud, defendants contend that the facts show such legal or constructive fraud as to vitiate the contract. It appears that J. M. Dougan, who was the real plaintiff, was 76 years of age; that he had been in the contracting business for 54 years, the last-40 of which were in Oregon and Washington; that he had constructed the United States National Bank, the Benson Hotel, the Telephone Building adjoining, in the City of Portland, and a subtelephone building in Oakland, California, at a cost of $550,000; four other courthouses in the State of Oregon, including the United States Courthouse and Postoffice at Medford; and that he built a postoffice at Los Angeles at a cost of a million and a half dollars. The record; shows that in response to the advertisement Dougan submitted his bid on each courthouse, and in both instances was the lowest bidder. On Block 35 his bid was $131,775, and he testified that the building actually cost $137,000, and that there would have been a substantial profit to him if he had been awarded the contract for the completion of the courthouse on Block 10. There is no proof tending to show that Dougan had any personal interest in building a courthouse on Block 35 or as to where it should be constructed. It is clearly brought out in the record that he lost on his contract, and that if his bid on Block 10 had been accepted he would have made money. The evidence is conclusive that there was no fraud, actual or constructive, on the part of Dougan.

Section 937, Oregon Laws, among other things,enacts:

“The County Court has the authority and powers pertaining to county commissioners to transact county business; that is—

“(1) To provide for the erection and repairing of courthouses, jails, and other necessary public buildings for the use of the county; * *

“(7) To estimate and determine the amount of revenue to be raised for county purposes, and to levy the rate necessary therefor, together with the rate required by law for any other purpose, and cause the same to be placed in the hands of the proper officer for.collection; * *

“(9) To have the general care and management of the county property, funds, and business, where the law does not otherwise expressly provide.”

As stated, nothing was said in the special levies of 1909, 1910, and 1911 as to where the courthouse should be constructed. It was specifically provided in the levies for the years 1913 and 1914 that they were made for the purpose of constructing a courthouse on Block 10, and all the moneys derived from the levies for the years 1909 to 1914, inclusive, were used for that purpose. Thereafter no levy was ever made for the express purpose of constructing a courthouse on Block 10. All subsequent levies were, made for “new courthouse construction,” and “to be used in the construction of a new courthouse,” without specifying where it should be built. The moneys derived from the levies after the year 1914 accumulated from year to year, were all placed and hept in a separate and distinct account hnown and designated as the “special courthouse fund.”

In this situation the County Court, in November, 1917, acting as a unit, and after due consideration, employed three reputable architects, two in Portland and one in San Francisco, to make an examination and report as to the actual condition of the unfinished courthouse on Block 10 and the cost of its completion. Such written reports were made and filed, showing that to finish the building under the original McDougall plans would cost from $138,000 to $210,000, and that by changing the specifications it would cost from $120,000 to $193,000, depending upon the changes; and two of them found that it would require $30,000 additional for the improvement of the grounds. As a result, on January 25, 1918, the county employed architects to draw plans and specifications for a courthouse for Klamath County and supervise its construction. Plans were prepared for the "completion of the courthouse on Block 10 in accord with the original McDougall plans, as modified by the County Court, and also for an entirely new building on Block 35.

It appears from the record of February 21, 1918, that “after discussion of said plans with the architects it was considered for the best interests of the people and taxpayers of the county to call for bids for the completion of the present new courthouse and for the construction of an entirely new building according to the plans at this time submitted.” It was then ordered that notice to contractors be published for bids for the completion of the old and the construction of a new building, “so that the court may be informed of the best course to pursue, taking into consideration the best interests of the county.” Pursuant to such published notice five different bids on each courthouse were received, and on March 20, 1918, they were opened. The lowest bid for the completion of the courthouse on Block 10, under the McDougall plans, as modified by the County Court, was $181,546, the lowest for the construction of the courthouse on Block 35 was $131,775, and on each Dougan was the lowest bidder. Commissioner Short moved that all bids be rejected. This motion was lost. The journal of that date shows that, “after reading and comparing the bids, the court decided to accept the bid of J. M. Dougan Co. for the alternate building of a new courthouse on the site of the old courthouse on Block 35, original town, for the sum of $131,775, and a contract was entered into and signed by J. M. Dougan, first party, and Marion Hanks, County Judge, and F. H. McCornack, County Commissioner, for the county.” Considerable feeling and discussion arose from the action of the County Court in calling for bids on both courthouses, which resulted in the County Court making the record in its journal of March 8, 1918.

1, 2. Under Section 937, Oregon Laws, subject only to the constitutional limitation as to indebtedness, and in the absence of fraud, the County Court has authority to enter into a contract to build a courthouse. In doing so the county judge and commissioners act for, and are the fiscal agents of, the county, and do not exercise a judicial power. In the transaction of such business their acts can only be reviewed, set aside, or impeached upon the ground that they are illegal or tainted with fraud, either actual or constructive.

In Avery v. Job, 25 Or. 512-524 (36 Pac. 293, 926), this court states the rule:

“No principle of equity jurisprudence is, perhaps, better established than that when the officers of a municipal corporation are clothed with a discretionary power, and are acting within the scope of such power, a court of equity will not sit in review of their proceedings, or interfere by injunction, at the suit of a private citizen, unless fraud is shown, or the power or discretion is being manifestly abused to the oppression of the citizen. The fact that the court would have exercised the discretion in a different manner will not warrant it in interfering. * *

“Now, in this case the matter of erecting or purchasing waterworks is, by the charter of Corvallis, committed to the judgment and discretion of the council, and whether they act wisely or unwisely in so doing it is not the province of a court of equity to interfere, so long as they exercise such judgment or discretion in good faith.”

In Shebley v. Quatman, 66 Or., page 448 (134 Pac. 71), it is said:

“Courts will not presume fraud, and will not find fraud except upon clear and satisfactory testimony.”

3. There is no evidence that Dougan was guilty of, or a party to, any fraud. Under the facts shown it was a difference of opinion only as between the contending factions as to where the courthouse should be located, and as to what was for the best interests of the county. It had a valid title to Block 35, where the old courthouse stood. It did not have a valid title to Block 10 and could not acquire the title without completing that courthouse. In this situation, the County Court sought the aid and advice of three leading architects as to the condition of the old building and the amount which would be required to complete it, and received and considered their written reports. Based upon those reports, it then employed an architect to draw plans and specifications for the completion of the old courthouse on Block 10 in accord with the modified McDougall plans as the same were approved by the court, also plans for the construction of a new courthouse on Block 35. It next called for, and received, bids on both buildings. In all of such proceedings the County Court acted as a unit until such time as a majority accepted Dougan’s bid for the construction of the courthouse on Block 35, and entered into the written contract, which is the subject matter of this suit. All of such proceedings were a matter of public record and up to that point the board was acting in harmony. Although people may differ as to what the County Court should have done, as to what was then for the best interest of the county, and as to which bid should have been accepted, the letting of the contract was the exercise of a discretionary fiscal power vested in the County Court under Section 937, Oregon Laws, and the evidence does not sustain the claim of the defendants that the old County Court was fraudulent or dishonest in the exercise of that discretion. Under such a state of facts, there could be honest differences of opinion as to what should be done, where the courthouse should be built, and as to .what was for the best interests of the county.

4, 5. About the first official act of the new County Court was to make the journal entry of April 27th, supra, to the effect that Dougan should “cease work on such contract,” and that the county would not be responsible for the purchase of any more. material. In effect, this was an implied admission by the new County Court that Dougan had a valid contract; that the county was liable for the labor which had then been performed and for the material furnished; and that it then wanted to terminate the contract and stop any further liability. Outside of the fact that this journal entry was made, there is no evidence that it was ever served upon Dougan, or that he ever had any personal knowledge of it. For such reasons it would not have any legal effect. It is very apparent that this notice was not served, for the reason that the County Court later took another and different position. This action was followed by the journal entry of May 2d, supra, in which for the reasons therein stated the County Court then declared the Dougan contract null and void and cancelled. Mr. Stone accepted service of that order as attorney for Dougan, and a certified copy of it was served upon the superintendent of the plaintiff. Later the order was made directing the district attorney to bring action against Dougan to recover the $41,548 previously paid, upon the theory that the contract was null and void, and that the payment had never been legally authorized. In their further and separate answer defendants allege, in substance, that Dougan should be estopped to claim or assert, after the receipt of such notice, “that they proceeded with said alleged courthouse, and should be entitled to recover for material ordered therefor” after the County Court had declared the contract null and void, and that he had never made claim “for any damages due for alleged breach of said contract, and ought not to be permitted to recover from Klamath County or to enhance the damages against Klamath County, or to make any claim for any labor or material furnished or work done.” The vital question in this case is, whether, after the receipt of such notice, Dougan could go on and complete the contract, and then recover the full amount of his claim against the county. Clark v. Marsiglia, 1 Denio (N. Y.), page 317 (43 Am. Dec. 670), lays down the rule:

"The measure of damages against a party who has employed another to do certain mechanical work at a price agreed upon, and who has countermanded his directions and forbidden the further execution of the work, after it had been commenced, is not the whole amount agreed to be paid, but a just recompense for such injury as the party employed has sustained on account of the breach of the agreement. The party so employed has no right to proceed with the work after such countermand.”

This is the leading case on that question, and the legal principles are followed and sustained in Cyc., Vol. 9, page 638; R. C. L., Vol. 6, page 1031; and C. J., Vol. 13, page 655, with numerous authorities cited. Appellants recognize the force of that rule, but contend that it does not apply to the instant case. Distinguished counsel have not cited, and after diligent search we have not found, any authority, pro or con, as applied to the facts here. They are peculiar. The county is the real defendant, and it was in debt beyond its constitutional limitation. It had no legal right to enter into a contract for the construction of a courthouse to be paid out of its general fund, and legally could contract only for the bpilding of a courthouse to be paid out of its special fund. Taxes had been assessed, levied, and collected from year to year for the express purpose of building a courthouse. To that end the Dougan contract was signed, and in good faith he entered upon its performance. After he had partially performed, and contracted debts and liabilities for which he was personally liable ranging from $60,000 to $90,000, he was then notified that his contract was null and void and cancelled. The county did not pay, or offer to pay, him for what he had done, or to release him from any of his liabilities incurred under his contracts for material. This was followed by an action to recover from him the money which he had received. The only fund which the county had or which was available to Dougan was the special courthouse fund, which had been assessed, levied, and collected for the sole purpose of constructing a courthouse. Under such a state of facts, if Dougan had acquiesced in the notice of the county to terminate, his remedy would have been an action at law in damages for a “just recompense for such injury as the party employed has sustained on account of the breach of the agreement,” for which he would have obtained a judgment against the county. In such an action the liability of the county would not be founded upon a contract for the construction of a courthouse, payable out of its special fund, but would be based upon damages arising from, and growing out of a breach of the contract by the county, payable only out of its general fund. For such reasons the judgment would be a nullity. This is a suit in equity, to reach a specific fund which had been collected and existed for a specific purpose. The contract was made with reference to that fund. Without doing, or offering to do, equity, can the county breach the contract and relegate Dougan to an action at law in which his judgment would be a nullity?

As stated, from year to year taxes have been levied and collected for the specific purpose of building a courthouse, and were set aside and carried in a separate fund for that purpose, and the law says that such fund must be used and applied to the specific purpose. The rule is well stated in Cyc., Vol. XI, page 510, which reads:

“Where special county funds are authorized, and are in fact raised, for a particular purpose, they must be applied thereto and cannot be diverted to any other purpose or transferred to any other fund, unless a surplus remains after satisfying the indebtedness or demands for which the fund was originally created; and, where special funds are authorized and raised for a particular purpose, their application to the original purpose may be compelled by a taxpayer.”

This rule is approved in C. J., Vol. XV, page 584, and in the discussion of which it further says:

“Also where by statute a certain claim is payable out of a particular fund, the county is not liable to pay it out of any other fund'; and where money has been improperly paid out of a special fund, it cannot be recovered as general county funds.” Citing Loe v. State, 82 Ohio St. 73 (91 N. E. 982).

In State v. Mikkelson, 24 N. D. 175 (139 N. W. 525), it is said that:

“A fund derived from drainage assessments is a trust fund, to be applied to the purposes of drainage only, and the county is the trustee thereof, * * without legal authority to divert it to other uses.”

In Adams v. Helms, 95 Miss. 211 (48 South. 290), the syllabus says:

“The board of supervisors being required (Code 1906, § 307) to maintain a courthouse, and authorized (Code 1906, § 319) to insure the same against loss by fire, the proceeds of fire, insurance policies on a burned courthouse, when collected by the county treasurer, do not become a part of the general funds of the county, but constitute a trust fund to be used only to construct a courthouse, and the character of the funds cannot be changed before the county is provided with one.”

In that case, the courthouse was insured and destroyed by fire, and. the creditors of the county sought to reach the money which was paid on the policy of insurance. The court says:

“It is a trust fund, to be used only for the purpose of replacing the property destroyed, so long as the county stands in need of the thing so destroyed. It required no order of the board to give this effect to the fund. Indeed, no order of the board can change the character of the fund until the county has had the things replaced.”

6. The journal entry of the new County Court, May 2, 1918, a copy of which was served on Dougan, and is in the statement, supra, recites that his contract is null and void and is canceled, and specifically sets forth and defines the reasons why it is null and void. Having adopted that resolution and specifically defined its reasons, can the county again change its position, and now recognize the Dougan contract as valid, and claim that it was terminated by the service of a notice which declares that it is null and void and defines the reasons why? His contract could not be terminated without notice, and the only one which was ever served was a copy of the resolution of May 2d to the effect that the contract was void ab initio and that Dougan had never had a contract. A notice to terminate implies the fact that a contract Was once in existence, and that one of the makers wants to stop any further liability. If the contract was null and void and never existed, there was no contract to terminate. The changed position, and the intention of the new County Court in serving the notice of May 2d, is very apparent. Bunnell was elected because he opposed the construction of the new courthouse on Block 35, and was in favor of the completion of the one on Block 10, and it was the intent of his court to use the special, courthouse fund for that purpose. This would have left Dougan without any remedy. The county had a valid title to Block 35, and from day to day, as labor was performed, material furnished, and the building constrúcted it all became and was the exclusive property of the county. Dougan never did have any title or interest in the building itself. The only claim which he had or could enforce was against the county, for its construction. The theory of the defense is, that his contract was null and void; that it was never legally executed; that he never did have a claim against the county; and that he should refund the money which he had received. The notice which was served upon Dougan did not in any way recognize but specifically denied, the existence of any contract. By it the county advised him that his contract was null and void, and this was promptly followed by an action to recover the money paid: Under such a state of facts, in equity and good conscience could the county terminate the contract without first placing, or offering to place, Dougan in statu quo. Without offering to do justice, can the county, by its own conduct, deprive Dougan of an equitable remedy and consign him to a worthless action at law.

7. There is no specific provision in the written contract that Dougan shall be paid out of any particular fund. The county had previously assessed, levied, and collected taxes for the construction of a new courthouse, and the contract was for that purpose, and it was to be upon land to which the county then had a valid title. It had no legal right to enter into a contract for the construction of a courthouse to be paid out of its general fund. Such an agreement would have been null and void, and unenforceable. We cannot assume that Dougan ever intended to enter into a contract to build a courthouse, and furnish a good and sufficient bond for its faithful performance, without compensation, or that the county then contemplated that it would get a new courthouse for nothing. The rule of construction of contracts is well stated in R. C. L., Volume 6, Section 244, where it is said:

“Necessary implication is, beyond doubt, as much a part of an instrument as if that which is so implied were plainly expressed. If it can be plainly seen from all the provisions of the instrument, taken together, that the obligation in quéstion was within the contemplation of the parties when making their contract, or is necessary to carry their intention into effect—In other words, if it is a necessary implication from the provisions of the instrument—the law will imply the obligation and enforce it. The policy of the law is to supply in contracts what is presumed to have been inadvertently omitted by the parties, the parties being supposed to have made those stipulations which as honest, fair, and just men they ought to have made. Therefore, whatever may fairly be implied from the terms or nature of an instrument is, in judgment of law, contained in it. One who undertakes to accomplish a certain result agrees by implication to supply all the means necessary thereto. He is bound by implication to do everything necessary to enable him to perform his contract. In fact, it may be said that contracts impose on parties, not merely obligations expressed in them, but everything which by law, equity, and custom is considered incidental to the particular contract, or necessary to carry it into effect. Whatever the law necessarily implies in a contract, is as much a part thereof as if expressly stated therein.”

It must follow that, in equity and good conscience, the contract was made with reference to the special courthouse fund, and that both parties then contemplated and understood that the price should and would be paid out of that fund. This is further evidenced by the fact that with approval of a majority of the county court, warrants were drawn upon, and $41,580 was actually paid to Dougan out of that fund. The fund was raised to build a courthouse. The contract was let for that purpose, and it could be paid for out of that fund only.

8, 9. Respondents vigorously contend that the special courthouse fund was all levied and collected for the specific purpose of constructing a cofirthouse on Block 10, and that no part of it should be used in building a courthouse on Block 35; and it is true that the levies for the years 1913 and 1914 were made for the express purpose of the building on Block 10. Chapter 234, page 458, Gen. Laws Or. for 1913, known as the Budget Law, is entitled:

“An act to require estimates of amounts to be raised by taxation by any county to be made and published in advance of levy, and to provide for public meetings and discussions by the taxpayers of proposed levies; to prevent levy of taxes in certain cases greater than the estimates; or greater expenditures of public moneys than such estimates and 10 per cent thereof, and for other purposes.”

Section 1 makes it unlawful for any tax—

“To be levied, proposed or adopted, * * unless an estimate shall have first been made of the amount of money proposed to be raised by taxation for the ensuing year and such estimate published, and opportunity for a full and complete discussion thereof allowed in the manner hereinafter provided for.”

The estimates shall be fully itemized, showing under separate heads the amount required for each department of county government, the maintenance of county institutions or buildings, and the salaries of officers,—

“The construction, operation, and maintenance of each public utility, and * * a complete disclosure of the contemplated expenditures * * proposed to be raised by taxation, showing the amount of each * * .”

Section 2 enacts that such estimates with a notice of the time and place at which they will be considered, shall be published at least twice prior to the proposed meeting, in an official county newspaper. Section 3 makes it the duty of the County Court to then and there meet, and hear what any taxpayer might have to say for or against any proposed levy. Section 4 provides that after the hearing the County Court shall determine the amount of taxes to be levied, and shall make a separate levy for each purpose, and that its decision shall be entered in the proper records, and that no greater tax shall be levied “by the authority proposing such tax for the purpose indicated or collected,” and that “thereafter no greater expenditure of public money shall be made for any specific purpose than the amount so estimated and 10 per cent thereof.” Section 5 provides that no tax shall be levied by the County Court except by direct vote of the people, at a meeting duly and regularly called as now provided by law and in accordance herewith, for the purpose of levying taxes in excess of the estimates published as aforesaid and 10 per cent thereof.

The purpose of this Budget Law was to require the making and publishing of an itemized statement and amount of each item of the proposed levy for the current year prior to the levying of any tax, and to give the taxpayers an opportunity to be heard as to the necessity for levying such proposed taxes and the amount to be levied for each of such items. The published budgets for the years 1915, 1916, and 1917 did not call for a proposed tax to construct a courthouse on Block 10. For those years they were for moneys for “new courthouse construction,” and “to be used in the construction of a new courthouse,” and those levies followed and conformed to the budgets. Nothing was said in eithei the budget or levy as to where the money should be “used in the construction of a new courthouse.” Although a small portion of it was paid out on old debts which had been previously contracted, yet the fact remains that after 1914 not a dollar of the fund was ever expended upon any new work on Block 10. The fund was permitted to accumulate from year to year, and remained idle until the architects were employed to make their investigation and report. All the money derived from previous levies was paid out on Block 10.

In this situation, on March 20, 1918, the county made the Dougan contract to construct a new courthouse on Block 35. Under the facts shown to exist here, we hold that under Section 937, Oregon Laws, the County Court had the legal right, on March 20, 1918, to enter into a contract with Dougan for the construction of a new courthouse on Block 35, and to use and apply the money then in the special courthouse fund in payment for the building. The letting of the Dougan contract was followed by the recall of Hanks, and the election of Bunnell, as county judge. The published budget of December, 1918, calls for a proposed tax of $20,000 for “completion courthouse, Block 10, Hot Springs Addition to Klamath Falls.” It is that priblished item of which the taxpayers had notice. The journal entry shows that the corresponding levy was made for “new courthouse construction.” The respondents challenge the entry, and a majority of the County Court claim that it was never authorized. When we consider that Hanks was primarily recalled because he let the Dougan contract to build a new courthouse on Block 35, and that Bunnell was elected because he was opposed to the construction of that courthouse and was in favor of the completion of the one on Block 10, and the further fact that the published budget for December, 1918, called for a levy for the “completion courthouse Block 10, Hot Springs Addition to Klamath Falls,” it is very apparent that it was never the purpose or intent of the new County Court to make a levy for the construction of a courthouse on Block 35. Assuming’ that the levy which was actually made was for “new courthouse construction,” it must he construed with reference to the published budget which provides for the “completion courthouse, Block 10,” and when so construed it would mean that it was the purpose and intent of the county court to then make a levy for the use and benefit of Block 10.

The case of Little v. City of Portland, 26 Or. 235 (37 Pac. 911), is not in point here. There is a vital distinction both as to the facts and the remedy invoked.

Again, this levy was made in December, 1918, and Dougan’s contract was sighed on March 20, 1918. The complaint is drafted upon the theory that he kept and performed his contract, and is entitled to a decree of specific performance against the county, and that the amount of his decree should be paid from and out of the special courthouse fund. Assuming that a contract therefor would be valid and could be enforced, there is no evidence that the County Court ever promised or agreed to make any future levies, the proceeds of which were to be applied upon the Dougan contract. This would leave nothing but a moral obligation, if any, on the part of the county, for which Dougan could not have a decree of specific performance. Dougan’s contract was made with reference, and related, to the special courthouse fund as it existed or was in process of collection on March 20, 1918, and within itself would not embrace or include any moneys derived from any future levy. As applied to the Dougan contract, no part of the money derived from the levy of December, 1918, should be deemed or treated as a special courthouse fund, but all other moneys in that fund should be applied pro tanto to the amount due and owing on the Dougan contract.

It is true, as respondents contend, that under the terms of the deed, if the county does not complete and maintain a courthouse on Block 10, it may, and perhaps will, lose the money which it has expended on construction, amounting to about $150,000; but it is also true that the county never entered into a contract in or by which anyone undertook or agreed to construct or complete the courthouse on that ground, or that it ever entered into any contract with anyone to build a courthouse on that block. All the work on that building was done on “force account” by the county itself, and there was never any contract let for its construction or completion. In other words, the county itself expended the money out of the special courthouse fund in the partial construction of that building, but not a dollar of it was ever expended upon a specific contract. For such reason, there is no person who can claim or assert that he has an interest in, or a debt which should be paid out of, that fund; and therein lies the vital distinction between defendants’ theory and the facts shown in the instant case.

10. Respondents also contend that it appears from the journals of the County Court that the Dougan contract was never authorized or legally executed, and cite Section 940, Oregon Laws, which provides that:

“The County Court is held at such times as may be appointed by law and at such other as the court in term, or the county judge in vacation, may appoint, in like manner and with like effect as the Circuit Court or judge thereof is authorized by Section 925.”

Also, State v. Rhodes, 48 Or. 133 (85 Pac. 332), where it is held that:

“The county judge and county commissioners of any county in this state do not constitute the county court thereof for the transaction of county business unless they assemble at the time prescribed by law, or at a time designated by a general order of such court to that effect made and entered in the journal during the term time, or by a special order made and filed by the county judge in vacation, authorizing the transaction of certain business therein specified. The county judge of Yamhill County and a county commissioner thereof not having assembled at the time thus prescribed, they did not compose the County Court of that county for the transaction of county business. ’ ’

That case was a mandamus proceeding to compel the County Court to make an order declaring the result of an election, and did not arise out of the transaction of county business by the county commissioners as the fiscal agents of the county.

In the case at bar it conclusively appears from its journal entries that the County Court was harmonious. All of its members acted as a unit in preparing the budgets; in making the levies for the years 1915, 1916, and 1917; in the employment of the architects to examine and report as to the condition of the building on Block 10; in the employment of an architect to prepare plans and specifications for the completion of the old building and the construction of the new; in the receiving and consideration of such reports and the approval of each set of plans and specifications ; in the publication of notices that bids would be received, and in the receipt and consideration of such bids. All of such things were done in harmony and with, the full approval of each member of the court. The record also shows that all of its members were present and acting when the motion of Commissioner Short to reject all bids was lost, and when the contract was awarded to Dougan, which was later signed by a majority of the court. It further appears that all such proceedings were held in the County Court room; that all of such business was transacted either at a regular or an adjourned meeting of the board; and that all of such proceedings except the actual awarding and signing of the contract, were the official acts of every member of the County Court.

11. After Judge Hamilton’s decree was rendered, and on application to this court, the former restraining order was renewed upon the giving of an approved bond, and is now in force and effect. Upon a proper showing, and as one of the conditions of ‘that order, the county was authorized to expend not to exceed $5,000 out of the special courthouse fund in the protection and preservation of the building on Block 10. We are not advised as to the amount which was actually expended, but all of that money should be paid out of proceeds from the levy of December, 1918, which was made for the use of that building, and no part of it should be paid out of the courthouse fund as it existed at the time of the Dougan contract.

12. On January 25, 1918, the County Court entered into a written contract with the firm of McClaran, Houghtaling & Dougan, architects, to prepare plans and specifications for the completion of the county courthouse on Block 10, and the. construction of the new courthouse on Block 35, and to superintend the work of the one selected at an agreed compensation of seven and one-half per cent of the contract price, with the specific provision that the fee should be paid out of the courthouse fund. It appears that about the time the Dougan contract was let warrants were drawn to the architects and paid out of that fund, amounting to $6,788.76. On the face of the record, that was a proper payment. It does not appear that any fúrther payments were made to the architects, but the firm, as such, is not a party defendant, and the balance due, if any, or how it should be paid, is not before the court and could only come here upon a stipulation signed by all parties in interest. It also appears that, pending the suit and upon orders of the trial-court attorneys for defendants have been paid, on account of fees, certain amounts out of the courthouse fund. In equity, no part of such fees should be taken out of, or charged to, the fund for the courthouse on Block 35. Beyond that point the question of how such payments should have been made, also is not before the court.

13. After a careful consideration of the numerous questions presented in the able and exhaustive briefs of opposing counsel, we hold that all of the money which was in the special courthouse fund on March 20, 1918, or in process of collection, could be used and applied in the construction of a new courthouse on Block 35; that the County Court had the power and authority to, and that it did, legally make the Dougan contract; that he-entered upon its performance and completed the building in accord with its terms; that it was never terminated by the county; that there is now justly due and owing Dougan under that contract $92,674.95; that the taxes derived from the levy of December, 1918, are not a part of the special courthouse fund for the building of a courthouse on Block 35, and that no portion thereof should be applied upon the Dougan contract; that all the money which was paid by the county under an order of this court pendente lite, for the preservation of the building on Block 10, should be paid only out of the proceeds of the taxes which were collected under the levy of December, 1918; that no part of such attorney’s fees shall be charged to, or paid out of, the fund for Block 35; that Dougan should have a decree against the county for the. full amount of his claim, and for the costs and disbursements of. this suit, which costs and disbursements shall be a claim against the county and payable out of its general fund; that the whole amount of the special courthouse fund for Block 35, as defined in this opinion, shall be applied upon the payment and pro tanto satisfaction of $92,674.95, the amount of Dougan’s claim.

The decree of the lower court will be reversed, with costs to the appellant, and one entered here in accord with this opinion. Pending such application of the fund, the existing injunction will remain in force and effect. Reversed. Decree Entered.

Rehearing Denied.

Benson, J., not sitting. Brown, J., had not qualified and took no part in the consideration of this case.

Case Details

Case Name: Dougan Co. v. Klamath County

Court Name: Oregon Supreme Court

Date Published: Nov 30, 1920

Citation: 193 P. 645

Court Abbreviation: Or.